JOHANNESBURG (Capital Markets in Africa) – An offer for Barclays Plc’s Zimbabwe unit by its management and backed by funds from the country’s social security agency lost out to Malawi’s First Merchant Bank Ltd.

It’s a “shame” that Barclays Bank of Zimbabwe Ltd. didn’t stay with local investors, National Social Security Authority Chairman Robin Vela said by phone from the capital, Harare, on Monday, confirming that the agency was willing to fund the deal. “Barclays Plc made their decision and it’s within their rights to sell to whomever they like,” he said.

Barclays views management buyouts as rarely successful in banking and was more comfortable with First Merchant Bank because it has operations in the region, three people familiar with the matter said, asking not to be identified because they’re not authorized to speak publicly. They didn’t comment on the financial terms of the offer. Barclays kept a 10 percent stake in the subsidiary, the people said.

Zimbabwean banks have had to limit cash withdrawals by customers because of a shortage of banknotes in an economy that has halved in size over the past 16 years.

Repeated calls to the mobile phone of Barclays Bank of Zimbabwe MDGeorge Guvamatanga since last week seeking comment haven’t been answered. He didn’t respond to a text message, while staff at his office said he is not in the building.

First Merchant, based in Malawi’s capital of Blantyre, agreed to buy Barclays Bank of Zimbabwe last week to add to its businesses in Botswana, Mozambique and Zambia. Details of the transaction, which still needs approval from regulators in Zimbabwe and Malawi, haven’t been released. FMB, as the lender is known, has a market value of 37.4 billion kwacha ($51.4 million) compared with $73.2 million for Barclays Bank of Zimbabwe Ltd., according to data compiled by Bloomberg.

FMB’s purchase of a 57.68 percent stake is being partly financed by London-based CDC Group Plc, a development finance company, Zimbabwe’s state-controlled Herald newspaper reported last week. The country’s empowerment laws require 51 percent local ownership of businesses.